Board ‘hits pause’ on Charles City broadband project

By Bob Steenson, bsteenson@charlescitypress.com

A trace of doubt crept into the plans for a municipal broadband network Monday afternoon as the Charles City Telecommunications Utility Board of Trustees “hit pause” on a list of important steps.

On the meeting agenda had been approving a bond purchase agreement and sales parameters to sell almost $22 million worth of revenue bonds to finance the project, offering a contract to a candidate for general manager, awarding the bid to lay 66 miles of underground fiber that would be the heart of the project, and moving forward with a marketing plan.

None of that happened Monday as Board of Trustees Chairperson Cheryl Erb announced at the beginning of the meeting that those items were not going to be considered.

“This board — I believe I can speak for them — we serve as stewards for the community and the financial terms at this time just do not support us making a good stewardship decision and taking action at this time,” Erb said.

“We are hitting pause and we will discuss our next steps at a future meeting,” she said.

Mayor Dean Andrews, who attends most of the trustees meetings, asked when that meeting would be and what would be discussed.

“We have $1.2 million invested in this right now and I’m kind of wondering where we’re at. I would like some sort of a status report as far as where we’re at, where we’re going, why we aren’t going, all those kind of things,” Andrews said.

Erb responded, “We would like to give that. We need time to take a collective deep breath and figure out exactly answers to those questions.”

The City Council had authorized a $1.2 million line of credit to the board for the purpose of establishing a broadband utility. Much of that money has already been spent — to purchase a building for a data center, but mostly for various studies, plans and consulting fees.

Erb said she made the decision to remove the items from the agenda after talking with financial consultants regarding their efforts to sell the bonds.

One of those consultants, Michael Maloney, with D.A. Davidson & Co. of Des Moines, said that working through the financing, the business plan and the goals that had been established for the project, and with the feedback to date, “we want to just take an opportunity to evaluate that further.”

The next regular meeting date for the board would be Tuesday, Dec. 8.

Andrews said, “I guess I have a little concern because we invested a lot into this with the intent that this would all go forward pretty smoothly and it hasn’t done that, and I would hope that we will get some kind of explanation at the Dec. 8 meeting.”

Erb said, “That’s what we’re hoping to do at that meeting as well.”

She said there is “definitely true desire” to see the project accomplished.

“I think the board is here today to say, yeah, they support the project and support it moving forward, but also being mindful of being good stewards,” she said.

Questioned after the meeting, Erb said they would look at options for financing as well as the scope of the project.

When asked if there was a danger that the broadband network and its various services could not be accomplished, Trustee Danny Wilson Jr. said, “I believe you can say we’re examining all our options at this point. There’s other avenues that we could still take that we’ve looked at before that we may have not had chosen to go that route and now we may choose to. We still have options to play.”

City Administrator Steven Diers said, “I think we need more feedback from our finance team that’s been out looking to sell the bonds and figure out what that way forward is. Right now we just don’t have an answer for that.”

The board had originally planned on having financing lined up in June and available in July, with project construction to have begun in late summer or early fall this year.

That schedule has been moved back time and time again, as board members and consultants announce a meeting to finalize financing, only to see those dates come and go.

The goal since the beginning has been to repay the financing through revenue from the internet, television and telephone services provided, so that the system is paid for only by those who use it, and to not make city taxpayers liable for the project.

Diers has said several times that it’s been challenging to find the right financing because this is the first time a community has tried to create a municipal broadband system without another city-owned utility such as an electrical utility that could be used to back the financing.